Ingenuity Should Trump Layoffs

[Jon Katz]

Layoffs have become the quick, dirty fix for companies whose profits have sunk during the current recession.

When times are tough, employees usually become the first targets of "cost-cutting" initiatives. Perhaps the worst part about this so-called strategy is the perfunctory, canned CEO statement, such as this one by Microsoft CEO Steve Ballmer:

"The decision to eliminate jobs is a very difficult one. Our people are the foundation of everything we have achieved and we place the highest value on the commitment and hard work that you have dedicated to building this company."

Blah, blah, blah...

One way CEOs can spare us from their "I'm so sorry I had to let you go" blather, is by seeking more creative ways to cut labor costs without resorting to the ever-trendy "headcount reductions."

A column by Peter Cappelli in Human Resource Executive Online offers several alternatives to layoffs that could be just as effective, if not better. He recalls how prior to the 1980s, layoffs meant temporary job losses with the prospect of being recalled. Then, somewhere along the line companies decided it would be easier to can these workers for good.

Cappelli notes that in the past companies explored other avenues, including:

• wage cuts
• reduced work hours
• job sharing where the same job would be split into two part-time positions
• cutting back on outsourced work and using vendors to provide work for regular employees whose normal tasks were no longer needed

Cappelli uses FedEx as a prime example, saying:

The best example of a significant company that is pursuing real alternatives to layoffs is FedEx, where they are cutting wages to reduce costs. What is particularly important about the cuts at FedEx is that the cuts are even bigger for executives: 10 percent for executive pay, five percent for everyone else. (Fed Ex also announced for the first time that it will not be advertising in the Super Bowl, another very public effort to save money.)

The best part about the above example is the 10% executive pay cut. It's unconscionable on the part of executives to tell employees they have to make some sacrifices without making any cutbacks for themselves, or publicizing what their self or board-imposed reductions will include.